Corporate greed is not to blame for high inflation, SF Fed says
Bolvin Wealth Management Group President Gina Bolvin discusses the move in commodities, expected inflation data, the housing industry and her outlook for consumers.
President Biden and other Democratic lawmakers have frequently blamed corporate price gouging for chronic inflation that has Americans paying more for everyday necessities.
But new research published by the Federal Reserve Bank of San Francisco suggests that corporate greed is not a primary driver of the inflation spike that began in early 2021.
Although some companies jacked up prices after the COVID-19 pandemic – markups surged for things like gasoline and cars in 2021, for instance – the researchers found the overall markup rate has generally remained flat, consistent with previous economic recoveries over the past three decades.
«These patterns suggest that markup fluctuations have not been a main driver of the ups and downs of inflation during the post-pandemic recovery,» wrote Sylvain Leduc, Huiyu Li and Zheng Liu in the bank's weekly Economic Letter.
INFLATION IS UP 20% SINCE BIDEN TOOK OFFICE
Customers shop at a supermarket in Foster City, California, on Sept. 13, 2023. (Photo by Li Jianguo/Xinhua via Getty Images / Getty Images)
The findings run counter to a recent push by Biden to blame «shrinkflation» – when companies reduce the package size and portions of their foods while also raising the price or holding it steady – and corporate greed for still-elevated prices.
At the end of February, the White House launched a new task force that is intended to take on «unfair and illegal» corporate pricing, which Biden has blamed for the frustratingly high price of groceries.
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